The stage of centralization in mining is likely one of the extra credible issues with Bitcoin at the moment. While there has not been a lot exercise when it comes to precise assaults made doable by mining centralization (although some would refer to SegWit2x as an attack), it does add inquiries to the extent of safety provided by varied layer-two protocols.
Recently, BetterHash has been promoted as a doubtlessly huge enchancment when it comes to bitcoin mining decentralization. During an interview on Peter McCormack’s What Bitcoin Did podcast, Chaincode Labs developer and Bitcoin Core contributor Matt Corallo, who authored the BetterHash protocol, mentioned the issues with mining centralization, how BetterHash may also help, and the problems round getting folks to truly use this enchancment.
What are the Problems with Bitcoin Mining Centralization?
Before moving into the main points of BetterHash, it’s vital to know the problems round bitcoin mining centralization.
“I think the key, kind of, trust model in Bitcoin is ultimately that hashpower is decentralized enough that no one, kind of, takes full control over it,” mentioned Corallo in his current interview.
According to Corallo, the obvious danger related to miner centralization is transaction censorship, and this drawback can transcend easy censorship when contemplating layer-two networks just like the Lightning Network and sidechains.
”This concept that some group of miners would possibly both be pressured to, would possibly resolve to, would possibly due to a technical bug, or no matter not embody sure transactions may end in folks shedding cash [in the case of the Lightning Network and sidechains],” mentioned Corallo.
The safety mannequin of one thing just like the Lightning Network depends on customers’ potential to broadcast particular sorts of transactions in a scenario the place somebody is attempting to cheat.
Another challenge with transaction censorship is that it weakens fungibility. If miners have been pressured to implement some form of blacklist, the bitcoin held in blacklisted addresses would turn into successfully nugatory.
Corallo added that the protocols used to mine bitcoin proper now are very susceptible to varied assaults.
“They’re completely unauthenticated, they’re not secure in any way (they’re not intended to be), and it would be rather easy for someone to hijack a large percentage of Bitcoin hash power for some medium to short period of time,” defined Corallo.
After hijacking a ample quantity of hash energy, an attacker would be capable to pull off 51% attacks in with a purpose to do issues like mine empty blocks, double spend cash, or censor particular sorts of transactions.
“When you have more miner centralization and more centralized control, it just makes the system much more brittle,” added Corallo.
What is BetterHash?
BetterHash is a mining protocol created by Corallo that might assist take away a few of the centralized parts of the mining ecosystem. The most vital facet of this protocol when it comes to decentralization is it offers particular person miners management over the transactions that can (or received’t) be included in mined blocks.
This means pool operators are taken out of the equation as doable vectors for 51% assaults. The share of the community hashrate that’s managed by every pool mainly turns into uninteresting from a mining centralization perspective. In truth, Corallo has stated in the past that it wouldn’t be a lot of an enormous deal if all of Bitcoin’s hash energy was pointed at a single mining pool that used the BetterHash protocol.
Getting Miners to Use BetterHash
Of course, simply because this new mining protocol exists doesn’t imply bitcoin mining might be utterly decentralized tomorrow. Indeed, Corallo first announced the existence of BetterHash on the Bitcoin development mailing list in June of last year, and there may be nonetheless loads of work to do when it comes to adoption.
According to Corallo, one of many points is nobody truly makes more cash by switching over to the BetterHash protocol, which implies the incentives aren’t precisely aligned for speedy adoption (exterior of bettering Bitcoin’s decentralization). In truth, there may be fairly a bit of labor concerned with making this modification.
“It requires mining pools to restructure their code to support a whole new protocol essentially — potentially run a completely parallel infrastructure, so they have to essentially run two mining pools. Existing mining pools have done a ton of work on optimizing their infrastructure and making sure everything is really well tuned, and now I’m showing up and asking them to run a completely parallel infrastructure for no additional money and less control,” defined Corallo.
Although Corallo thinks most swimming pools don’t truly care in regards to the stage of management they’ve over the mining course of and a few of them, equivalent to Slushpool and Poolin, don’t need that management, there are nonetheless different points that get in the best way of instantaneous adoption of BetterHash.
“They’d love to see something like BetterHash exist, but of course there are practical challenges in terms of actually getting customers who want to do this. And so, there’s questions about customer demand, and of course just the technical reality of having to run this thing is steep. And so, there’s a steep cost, and so seeing that kind of customer demand would go a long way to convincing folks to want to spend all of their time to build this. But of course, it’s also just going to be slow, right? Because engineering takes awhile, and so getting that kind of adoption is just going to take people awhile,” defined Corallo.
“I am talking to some folks,” Corallo later added. “Hopefully we’ll get there. We’ll see.”